### IN THE COURT OF APP EALS OF TENNESS EE AT KNOXVI LLE Fe br ua ry 17, 200 5 S es sio n

JA M ES M IC HA EL ED EN F IE LD v. KAR A L EIGH C OOP ER EDE NF IELD

Appeal f romthe Chancer y Court for K nox Coun ty No. 147462-2 Dar yl R. F ansler, Chancellor

No. E2004-00929-COA- R3-CV - F ILED OCTO BER 31, 2005

The c hief point of conte ntion in th i s bitterly foug ht divorce c ase involves the va luation and dispositi on of a one-ha lf interest in a service company which the husband and his business partner founded a nd worke d for during the marria g e. Both parties had asked the court to awa rd the husband the share of the business, and the wife ha d asked the court to aw ard he r the moneta ry equivalent of one-ha lf its value. I nstead, the trial court awarde d the bus iness to the wife, toge ther with all the de bt

as s o c iate d w ith it

. T h e w if e ar g u e s o n ap p e a l th a t a c ti o n s b y th e h u s b a n d r e n d e r ed the c ompany valueless a nd the distribution of property and debt wa s, conseque ntly , inequitable. B eca use we find that the business had no va lue apa rt from the e fforts of its pr i ncipals, we modify the valuation of property and allocation of debt. Be cause of the modification, we rema nd the case to the trial court to r e c on sid e r the qu e sti on of a tto rn e y fe e s.

Tenn. R. App . P . 3 Appeal as of Right; Judgme nt of th e Chancer y Court Aff irm ed as Modif

ied in Part , Vacat ed in Par t, and Rem anded

P A T RI CI A J. C O T T RE LL , J ., delivere d the opinion of the court, in which D. M I CH A EL S WI NEY a nd S HAR ON G. LEE , J J ., joined.

Ronald L . Grimm, Mary

L . Abbott, Knox ville, T en n es s ee , for the a ppellant, L ara

L eig h Cooper Edenfie ld.

Denise Te rry

Stapleton, Morristown, Tenne ssee, f or the a ppellee, James Michae l Edenfield.-2- OP IN ION



### I.

J ames Micha el Edenf

ield and Ka

ra L eig h Cooper Edenfie ld ma rried in 1993. This wa s her first marriag e and his s econd. A child, Cooper Micha el Edenf ield, was born of

their marriag e on J uly 29, 1997. The proof showed that both parties wor ked prior to a nd during their marriag e, but as the birth of their c hild approac hed, the pa rties ag ree d that Ms. Edenfield would quit her job to take

car e of the child and Mr. Ede nfield would undertake to support the f amily

.
Ms. Edenfie l d wa s a co l leg e g raduate and wa s only a fe w cr edits short earning an M.B.A. when B ristol University , which she ha d been attending, c los ed

. S h e worked at sever al jobs after leaving school, at eve r-incr easing salarie s, and had be en earning $70,000 per y ear as an information technolog y

consultant for D eloitte and Touc he bef ore Cooper

was born.

Mr. Edenf

ield g raduated from high sc hool and attende d colleg e for a y ear and a ha lf. After four y ear s in the Air For ce, he worke d as a sa lesman for Clay ton H omes and then a s a ca r salesma n
a nd de a le rs hip ma na g e r. I n 199 5, he te a me d up withSc ott L e wi s, a fo rm e r e mpl oy e r, to f

ou ndF ir st Cho ic e , a c omp a ny that se rv e s a uto mob ile de a le rs hip s by fu rn ish ing the m wi th a va ri e ty of pr od uc ts, such as ne w ca

r wa rra nties, ext ended se rvice contra cts, cre dit insurance, a larms, che micals, and “any thing that a

car deale rship can se ll a customer throug h the financ e off ice.”

F ir s t C h o i c e h a d f

e w a s s e t s o f i t s o w n ( a c h e c k i n g a c c o u n t , t w o f a x m a c h i n e s , a nd c e ll phones) a nd no employ ees othe r than Mr. L ewis and Mr . Edenfie ld

. The produc ts it sol d wer e
su pp lie d b y

oth e r c omp a nie s, a ndF ir st C ho ic e di d no t hav e e xclu siv e c on tr a c ts t o s e ll tho se products. Ne ither did it have long -term or exclusive ag ree ments with dealer shi ps. First Choice essentially

relied f or all its re venue upon the salesmanship of its two principals, who operated out of the trunks of their ca

rs. Most of that reve nue wa s paid out to Mr. Edenfie ld and Mr. L ewis in the form of sa laries. The company itself did not retain any

signific ant amounts of ca pital.

De sp ite its la c k of ta ng ibl e a sse ts, F ir st Cho ic e pr ov e d to be a su c c e ssf ul s ou rc e of

inc ome for its principals. Mr. Edenfie ld’s tax returns show that in 1999 he ea rned $104,264 in sala

ry from F i r s tC h o i c e , a n d i n 2 0 0 0 h e e ar n e d $ 1 1 6
, 2 5 3

. H e a l s o r e c e i v e d o t h e r b e n e f i t s f r o mt h e c o m p a n y, including he alth insurance , trave l expense reimburseme nt, a re tirement plan, a nd tickets to Nasca r
ra c e s f or him se lf a ndhis c lie nts

.
The parties lived well on Mr. Edenfie ld’s income and spent their money fre ely , althoug h they ha d to make so me a dju stm e nts wh e n M s. Ed e nf ie ld le ft he r j ob . T he y

didno t ma na g e to a c c umu la te very much in the w ay o f assets. The most valua ble marital a ssets at the time of divorc e we re Mr

. E d en fi el d ’s i n t e r e s t i n Fi rs tC h o i ce an d t h e m ar i t al h o m e, wh i ch wa s en cu m b er ed b y a l ar ge mortg ag e.A ltho u g h a n issu e a t t ria l, the c o u rt’s tre a tm e n t o f t h e $ 3 0 ,0 0 0 no te is no t i n v o lve d in this a p p e a l. 1

-3- Mr . E de nf

ie ld’ s w or k in vo lve d a

g re a t de a l of

tr a ve lin g

. He a dmi tte d at tri a l tha t du ri ng his marria g e he beca me i nvolved i n brief a ffa irs and one- night stands with other women while he was on the roa d. I n Marc h of 2000, he m et a wo m an wi th whom he wished to have a long er- term relationship. I n May , Ms. Ed en fi eld di scover ed her husband’s a ffa ir with this woman. Mr. Edenfie ld left the marital home on or about May

31, 2000.

II. P R O C EE D ING S B E L OW

Mr. Edenf

ield filed a Complaint for Divorce in the Chance ry Court of Knox County on J une 13, 2000, citing irrec oncilable differ ence s. Ms. E denfie ld filed an Answe r in which she de nied that irrec oncilable diff

ere nces e x isted and aske d the trial court to dism iss her husba nd’s complaint. She subsequently

filed a Counter -Complaint for divorce

. The pa rties enter ed into an Ag ree d Orde r establishing that Ms. E denfie ld w ould remain the primary phy sical custodian of

the ch i l d

. The orde r also set out a visitation schedule for Mr. Edenfie ld and obligated him to pay child support in the amount of $1,335 per month. A later orde r added $3,197 in spousal support to Mr

. Edenfie ld’s obligation. I n the fourte en months betwee n the fi lin g of the ini tia l c omp la int

a ndthe div or c e he ari ng , th e pa rt ie s p art ici pate d in me diatio n a ndin at least thre e court proce eding s to resolve disputes that had a risen betwe en them.

The he aring was c onducted on Septembe r 24 and 25, 2001. Si x witnesses testified - the parties themse lves, two ce rtified public ac countants, a psy cholog ist, and Mr. Edenfie ld’s g irlfriend. Much of the te stimonyhad to do with questions of fault, alimony , and vis itation, but we will focus

ou r d isc us sio n o n th e e vid e nc e re la te d to pr op e rt y div isi on , b e c a us e tho se a re the iss ue s r a ise d in thi s
app e a l.

The pa

rties had pur chase d a home whic h they estimated had a value of betwe en $215,000 and $240,000 at t he ti me of tria1. The amount owed on their m ortg ag e was $216,000. The re ason for the lack of equity in the hom e was that when Ms. Ede nfield bec ame pr eg nant, and the pa rties dec ided she should quit her job, Mr. Edenfie ld de cided to se ll his interest in F irst Choice and g o back to wor k for a deale rs h i p s o h e could earn a stea dier income . Scott L ewis re luctantly purcha sed Mr. Edenfie ld’s interest in the compa ny for $50,000.

For the next ten months , Mr. Edenf ield tried unsucc essfully to buy into a deale rship. The $5 0, 00 0 w a s app are ntl y sp e nt during that time

. F ina lly , Mr. Ed e nf ie ld a sk e d M r. L e wi s if

he c ou ld buy his share of

the company back. Mr . L ewis ag ree d to allow him to re-purc hase his intere st for $50,000 in cash an d a $ 3 0
, 000 side note. Mr. Edenf ield used the a vailable e quity in the marital 1 home to ref

inance and obtain the $50,000. He also used a home equity line of cr edit to finance the purcha se of a n Audi automobile.-4-

Ms. Edenfield a sked to be a war ded the marital hom e t o al low the child to continue to live there , and Mr. E d en fi el d ag ree d. The propose d distribution i n the parties’ joint lis t of assets and debts states that Mr. Edenf ield had no objec tion to Ms. Edenfield rec eiving the home, as long as he

wa s not liable on the debt. Ms. Edenf ield ag ree d to assume most of the debt, but not the portion inc ur re d to buy ba c k the int e re st in Fi rs t Choic e

. Th e pa rt ie s als o ag re e d tha t Mr. Ed e nf ie ld s ho uld reta in his int ere st in First Choice, but Ms. Edenfield a sked that Mr. Ede nfield be r equire d to pay her one-ha lf the value of that intere st over a pe riod of time.

No t su rp ri sin g ly , th e pa

rt ie s offere d ve ry

dif fe re nt e sti ma te s o f the va lue of the bu sin e ss. Glenn Thompson, a C.P.A. who had provide d acc ounting se rvice s to First Choice, wa s called by Mr. Edenfie ld and testified that the c ompany had virtually

no assets of its own, no employ ees othe r than Mr. L ewis and Mr. Edenfie ld, and that it did not have e x clusive ar rang ements with any

supplier or any deale rship. Since t he compa ny relied f or its income solely

upon the salesmanship of its two principals and the rela tionships they established, Mr. Thompson testified that it was unlikely that any buy er w ould be wil ling to pay a subst antial amount for a share in the company . He c oncluded that it therefor e had no va lue, or only a nominal value of $5,000 or $10,000. Mr. Edenf

ield testified that First Choice ha d no value se parate from the e fforts of its two owners as sa lesmen.

Ms. Edenfield c alled C.J . Hulen, anothe r C.P.A., who testified that a va lue could be pla ced

o n t h e c o m p an y

u s i n g t h e c ap i t al i z at i o n o f i n co m e m et h o d

. T h at m et h o d s t ar t s b y co n s i d er i n g a stream o f b enefits (chiefly persona l income in this case) , and then inter polates betwe en seve ral po ssi ble rate s o f r e turn o n ass e ts (in c lud ing the 30 y e ar tr e a su ry bo nd rate a nd the sma ll s toc k r isk rate ) to conve rt that strea m into an enterprise value. Mr. Hulen’s calc ulations resulted in a value of $3 44 ,7 80 fo r M r. Ed e nf

ie ld’ s h a lf

of the bu sin e ss.

As ke d if the c omp a ny c ou ld su rv ive wi tho ut its princ ipa ls, a nd thu s wh e the r a bu y e r c ou ld possiblybe found f

or the c ompany , Mr. Hulen testified t hat was possibl e. He sug g ested that a g ood salesman mig ht be intere sted in acquiring the company , and that af ter a transition period, such a buy er mig ht start earning sums compa rable to those earned by

Mr. L ewis and Mr . Edenfie ld.

Ms. Ed e nf

ie ld e sti ma te d th e va lue of the c omp a ny to be $5 00 ,0 00
, ba se d on a sto c k p ur c ha se
a g re e me nt ( a lso c a lle d a b uy/sel l a g re e me nt) that Mr . E de nf ie ld andMr . L e wi s h a d e xec ute d in conjunction with life insuranc e policies that e ach h ad t ak en out on the other. The ag ree ment provided that upon the death of a princ ipal, the $250,000 insuranc e amount would be use d to pay the d e c e d e n t ’ s s p o u s e o r

b e n e f i c i ar y f o r t h e d e c e d e n t ’ s s h ar e i n t h e c o m p a n y.

The intende d result of the ag ree ment was that upon the death of e ither principa l, the surviving spouse would be a

ble to partly

repla ce the income the de cea sed principa l had been earning, and the surviving principal would not find himself in an involuntary partne rship with the dece dent’s widow. Howeve r, Mr. Thompson had te stified that the buy -sell ag ree ment did not repre sent the compa ny ’s actua l value bec ause suc h ag ree ments are commonly in excess of t he value of t he company involved.-5- III. T HE C OURT ’ S R UL I NG

This case took a surprising turn during closing arg ument, a turn for eshadow ed by a question the court asked Mr. H ulen at the e nd of his testimony

. THE COURT: Mr. Hulen, j u s t one thing for the Court’ s clarif ication. I f the Court

awa rded Mr s. Edenfie ld Mr. Edenfie ld’s share s in this corpor ation, would she then be re ceiving an asse t worth $344,780.00? TH E WI TN ESS: I f s he g ot a ll o f i t. THE COURT: All rig ht. Thank y ou. You may step down.

During closin g ar gu m ent, M s. Edenfie ld’s attorney was discussing First Choice w hen the court a g ain sug g ested that the que stion of value could be eliminated by simply awa rding the share of the bu sin e ss t o th e wi fe . M s. Ed e nf ie ld’ s attorn e y

app e are d to ha ve be e n ta ke n a ba c k b y thi s sug g estion, but the transcript indicates that he looked ove r at his client and she shook her head in a way that he and the trial court took to be a ssent.

MR GRI MM: Mrs. Edenfield is shaking her he ad over here --

TH E CO UR T: Wel l, that se e ms t o s olv e that is su e

. Th e Cou rt wi ll o rd e r that.

At the c los e of

arg ume nt, the c ourt

a nn ou nc e d th a t it

wa s g ranti ng the div or c e to M s. Ed e nf ie ld o n th e ba sis of

he r hu sb a nd ’s a du lte ry

a ndina pp ro pria te mari ta l c on du c t. T he jud g e a lso

awa rded he r custody

of the c hild, set out some g round rules f or Mr. Ede nfield’s visitation, and stated that he was taking other matters under advisement. The court’s decision as t o the divorce , custody and visitation was memorialized on Octobe r 9, 2001 in a “ Final De cre e of D ivorce .”

To dispos e o f t h e re maining pr operty and support issues, the c ourt issued a Memor andum Opinion on November 19, 2001, setting forth its proposed re solution of the remaining issues. I n that opinion, the trial court found that Ms. Edenfie ld should be awarde d reha bilitative alimony

of $3,000

a mon th f or thr e e y e ars . A s in dic a te d in its a nn ou nc e me nt f ro m th e be nc h, the c ou rt

ind ic a te d it

wo ulda wa

rd the on e -h a lf int e re st in Fi rs t Choic e to M s. Ed e nf ie ld andva lue d it

in a c c or da nc e wi th Mr. Hulen’ s testimonyat $344,780. The transfer of the business intere st was to be acc omplished by Mr. Edenf

ield delivering his stock certif i cate s to Ms. Edenfield within thirty day s of the entry

of judgme nt and executing all documents nec essary to transfe r his interest in the cor poration to her.

Al mos t a ll the re ma ini ng fi na nc ia l is su e s w e re a ff e c te d b y thi s d e c isi on . F or ins ta nc e , M s. Edenfie ld had aske d the trial court to g rant her one-ha lf of Mr. Edenfie ld’s retire ment acc ount, which had a ba lance of abo u t $ 1 0
, 2 0 0 . The c ourt rea soned that re quest should be denied be cause of the

va lue of the pr op e rt y

sh e wa s to be a wa

rd e d. Ms. Ed e nf

ie ld h a d a lso in curr ed abo ut $ 69 ,0 00 in attorney fee s in the divorce and asked the trial court to orde r Mr. Ede nfiel d t o p ay h er fe es. The court de clined, bec ause Ms. Ede nfield would ac quire a n asset “va lued in excess of $340,000.”-6-

Ms. Edenfield ha d also asked that Mr. Edenfie ld be made r esponsi ble for that part of the mortg ag e on the marital home that was a tt ri butable to the re purcha se of the sha re of First Choice. Th e c ou rt he ld tha t th e log ic of

the situa tio n r e qu ir e d a

dif fe re nt r e su lt:

Be cause Ms. Edenfield is re ceiving all of the assets associate d with First Choice, Inc., it is app ro pr ia te tha

t sh e sh ou ld a lso a ssu me a ny de bt a sso c ia te d w ith the ow ne rs hip of that cor poration. Thus, the $50,000.00 that is inc luded in the first mortg ag e of the marital re sidence will not be car ved out of the first mortg ag e but will be assumed by Ms. Edenfield.

The trial co u rt direc ted the parties to review the Memorandum Opinion and to f ile befor e Dec ember

11, 2001 any motion nece ssary to bring to its attention any issues reg arding the division of marital pr operty

and marital debts that it ha d not a ddresse d. On Dec ember 1, Ms. Edenfield f

iled a motion which involved hea lth insurance, life insurance , and medica l bills as we ll a s a re quest that the c ou rt re vie w i ts a wa

rdof the on e -h a lf of F ir st Cho ic e to he r, be c a us e it “ los t it s v a lue be c a us e of c ir c ums ta nc e s b e y on d Pl a int if f’ s con tr ol, a nd it is the re fo re un jus t tha t Plai nti ff be bu rd e ne d w ith debt associated with that asset.”

Ms. Edenfield c la imed that First Choice ha d been a dminist ratively dissolved by

the Secr etary of Sta te on Se pte mbe r 1 5, 20 00 (p ri or to the div or c e he ari ng ), that Mr . E de nf ie ld h a d s ub se qu e ntl y obtained other

employ ment and wa s no longe r working for F irst Choice, and tha t Scott L ewis had notified Ms. Edenfie ld that he was not interested in wor king f or F irst Choice without Mr. Edenfie ld’s prese nce a s a shar eholder and employ ee.
During the J anuary

7, 2002 hearing on Ms. Ede nfield’s Motion, her attorney told the court that Mr. Edenf

ield was no long er w orking for F irst Choice. Mr. Edenfield’s attorney informed the court that h e h a d ta

k e n a jo b w ith a H yu n d a i d e a le r s h ip
, a t a n in c o me o f $ 5
, 5 0 0 p e r mo n th. Mr. Ed e nf ie ld’ s a tto rn e y

didno t di sp ute wi fe ’s c la ims that F ir st Cho ice had be e n a dmi nis tr a tiv e ly dissolve d o r

th a t S c o tt

L e w is w a s u n w il li n g to w o rk f o r F ir s t C h o ic e w ith o u t M r

. E d e n f ie ld ’s participation. After r ecounting the testimony at trial, the trial c ourt stated:

Now, as it t urns out , it looks like in retrospe ct, M r. Edenf ield’s ac countant may

have been the one that ha d the cor rec t testimonyin the case as opposed to Ms. Edenf ield’s

a c c o u n t a n t , a tl e a s tt h a t ’ s w h a tI’ mh e ar i n g h e r e t o d a y.

I will just say

this, if the Court altere d its judg ment in this case , it would only alter - - the only

alternati v e, . . . would be to hold that the value of the stock in the

c or po ratio n w a s w orth n oth ing , a ndth at that’ s e xac tly wh a t Ms . E de nf

ie ld w ou ld t ak e f ro mt h e c o rp o ra t i o n , n o t h i n g.

There ’s no in betwee n g round wit h proof in this case

. It’s either worth nothing or it’s worth $345,000. I f she doesn’t want the $345,000 worth of share s of stock, then she-7-

say s, I don’t want them, he takes the $ 5 0 ,000 debt, he ke eps his interest with the corpor ation, and eve ry

body g oes about their busine ss. . . .
Now, y ou all may

want to talk about this this morning and se e if y ou want to amend it that way

. I mean that’s the only two choice s the Court ha s in the case , an d the

rec ord doesn’ t support me doing any thing e lse.

Cou ns e l f or Mr . E de nf

ie ld s ug g e ste d th a t, s inc e no fi na l jud g me nt ha d be e n e nte re d, that a jud g me nt g o d ow n w ith “ no c ha ng e ” fr om the me mor a nd um opi nio n on the iss ue of the int e re st i n First Choice. Ms. Ede nfield’s counsel asked the court to a ddress the $50,000 debt attributed to the sh are of the bu sin e ss. Th e c ou rt

re sp on de d th a t it wo ulda me ndthe jud g me nt t o v a lue the bu sin e ss
a t zer o, a wa

rd the int e re st or sto c k in the bu sin e ss to Mr

. Ed e nf ie ld, a nd a ssi g n him the $5 0, 00 0 d e bt.

Coun s e l f o r M r

. E d e n f

ie ld s tate d h e d id n o t w a n t th e s to c k n o w s in c e h e h a d made other

arr ang ement s and ar g ued that the c ourt should just enter a judg ment and “w hateve r happe ns ha pp e ns .” Cou ns e l f

or Ms. Ed e nf

ie ld as ke d tha t the c ou rt

pu t do wn a

jud g me nt c on sis te nt w ith its l a s tp r o p o s a l

. A d i s c u s s i o n e n s u e d a s t o M s

. E d e n f i e l d ’ s o r i g i n a l r e q u e s t f

o r d i v i s i o n o f

t h e p r o p e r t y. The trial court conclude d by declining to chang e its orig inal property distribution i n the abse nce of an ag ree ment betwee n the parties to another resolution. On J anuary 17, 2002, the court entere d an order that awa

rded the one-ha lf interest in F irst Choice to Ms. Edenfie ld a long with the $50,000 debt attributed to its acquisition.

A final orde r wa s not filed in this case until May 8, 2003. The final o rd er i n corpor ated a pare nting plan, w hich imposed a c hild support obligation of $1 ,445 per month on Mr. Ede nfield. Th e pr op e rt y

div isi on in the fi na l or de r w a s c on sis te nt w ith the c ou rt ’s prior or de rs

. Ms. Edenfield timely

filed a Motion to Alter or Amend. The motion was acc ompanied by an af fidavit in wh i ch Ms. Edenfield testified that Mr. Ede nfield had de liberate ly destroy ed any

rema ining va lue of he r intere st in First Choice by disparag ing her to all the dea lerships which ha d pr e vio us ly

be e n h is c lie nts a ndby

c re a tin g , wi th S c ott

L e wi s, a ne w c omp a ny

c a lle d D e a le r S e rv ic e s, I nc., in direc t competition with First Choice. She stated the c harte r of this new c orporation had been filed January

3, 2002. Consequently , she ar g ued, Mr. Ede nfield had impaire d or destroy ed the va lue of the a sse t a ndthe pr op e rt y di st ri bu ti on wa s n ot e qu ita ble . T he c ou rt

de nie d h e r m oti on . T his appea l followed.

IV. P ROP E RT Y D I VI S I ON
Upon the dissolutio n of a ma rriag e, courts are c alled upon to divide the asse ts the parties

acc umulated during the marriag e, upon the r equest of e ither party . The c ourt’s first task is to classify the pa rt ie s’ pr op e rt y

a s e ith e r s e pa

rate or mar ita l, b e c a us e on ly mari ta l pr op e rt y

is s ub je c t to equitable distribution. Fl an na ry v. F la nn ary , 1 21 S.W. 3d64 7, 65 0 ( Te nn . 2 00 3) ; Eldridge v. Eldridge , 137 S.W .3d 1, 13 (Tenn. Ct. App. 2002). There is no dispute in the case befor e us that the

o n e

- h a l f i n t e r e s ti n F i r s tC h o i c e w a s m ar i t a l p r o p e r t y.T h e se fac to rs a re : 2 ( 1) T he dur at i on of

t he marr i age ; ( 2) T he age , phy s i cal an d m ent al he al t h, voca t i onal skil l s , empl oy abi l i t y , ea r ni ng ca paci t y , es t at e, f i nan ci al l i ab i l i t i es a nd f

i na nc i al nee d s o f

ea ch o f t he p arti es; ( 3) T he t ang i bl e or i nt ang i bl e cont r i but i on by one ( 1) par t y t o t he educa t i on, t r ai ni ng or i ncr eas ed ear ni ng power

o f t h e o the r p a rty;

( 4) T he r el at i ve abi l i t y of ea ch part y for f

ut ur e a cqui s i t i ons of

ca pi t al as s et s an d i ncome; ( 5) T h e con t r i bu t i on of e ac h pa r t y t o t h e ac qu i s i t i on , pr es er v at i on , appr ec i at i on , de pr ec i at i on or di s s i pat i on of
t h e mar i t al or s epa r at e pr opert y , i n cl u di n g t h e con t r i bu t i on of a pa r t y t o t h e mar r i ag e as h omema k er , w ag e ea r n er or pa r e n t , w i t h t h e c on t r i bu t i on of a pa r t y a s h om e ma k e r or w a g e e a r n e r t o be g i v e n t h e s a me w e i g h t i f e a c h par t y ha s f ul f i l l ed i t s r ol e; (6 ) T h e va lue o f t h e se p a ra te p ro p e rty o f ea c h p a rty; ( 7) T he es t at e of

ea ch part y at t he t i me of t he marr i age ; ( 8) T he economi c c i r cums t anc es of ea ch part y at t he t i me t he di vi s i on of proper t y i s t o becom e e f fect i ve; (9) T he t ax co nsequenc es t o each p art y , co st s ass o ci at ed w i t h the reasonab l y foreseeab l e sal e o f the asset
, and

o the r re a so n a b ly f

o re se e a b le e x p e n se s a sso c ia te d w ith the a sse t; (10 ) T he am o unt of social s ecuri t y be nef i t s avai l ab l e t o each spo use; and (1 1 ) S uc h o t he r fac t o rs as are ne ce ssary t o co nsid er the e q uit i es b etwe en t he p arti es.

-8- After identify ing the marital prope rty , the trial court is charg ed with equitably di v i d i n g, distributing, or a ssigning the marital property in “proportions as the c ourt dee ms just.” Tenn. Code Ann. § 36 -4 -1 21 (a )( 1) ; J

oll y v . J oll y , 130 S.W .3d 783, 785 (Tenn. 2004). The court is to c onsider all rele vant fa ctors in its distribut ion, including those listed in T en n

. C o d e Ann. § 36-4-121(c ). 2 Jolly, 13 0 S. W.3 d a t 78 6; Fl an na ry , 121 S.W .3d at 650. The c ourt may consider any

other fa ctors

nece ssary in determining th e equities betwe en the pa rties, Tenn. Code A nn. § 36-4-121( c)( 11), except that division of marital property is to be made without reg ard to marital fault. Tenn. Code Ann. § 36-4-121( a)( 1).

Th e c ou rt ’s dis tr ibu tio n o f p ro pe rt y is t o be a c hie ve d by c on sid e ri ng a nd we ig hin g the mos t

r e le v a n t f a c to r s in li g h t o f th e u n iq u e f a c ts o f th e ca se. B a t s o n v. Batson , 769 S.W .2d 849, 859 (Tenn. Ct. App. 1988); se e als o Flan na ry , 121 S.W. 3d a t 60 5; Tat e v . Ta te , 138 S.W .3d 872, 875 (T e nn . Ct . A pp . 2 00 3) . A n e qu ita ble dis tr ibu tio n is no t ne c e ssa ri ly a n e qu a l on e , a nda

div isi on is not r ender ed inequitable simply beca use it is not prec isely

equal

. Robertson v. Robe rtson , 76 S.W .3d 33 7, 34 1 ( Te nn . 2 00 2) ; Cohen v. Cohen , 9 37 S.W. 2d 82 3, 83 2 ( Te nn . 1 99 6) ; Kin ar d v . Ki na rd , 986 S.W. 2d22 0, 23 0 ( Te nn . Ct . A pp . 1 99 8) ; W or d v . W or d
, 937 S.W .2d 931, 933 (Tenn. Ct. App. 1996). S i m i l ar l y, e q u i t y d o e s n o t r e q u i r e t h a t e a c h p ar t y r e c e i v e a s h ar e o f e v e r y p i e c e o f m ar i t a l p r o p e r t y. King v. King
, 986 S.W .2d 216, 219 (Tenn. Ct. App. 1998); Br own v . B ro wn , 913 S.W .2d 163, 168 (Tenn. Ct. App. 1994).

Dec isions reg arding division of m arital property are fac t-specif ic, and many

circ umstances surrounding t h e property and the pa

rties play a role . A trial court has a g reat deal of discr etion

conce rning the m anner in which it divides marital prope rty

. J oll y , 1 30 S.W. 3da t 78 5; Fl an ne ry , 121 S

. W

. 3 d a t 65 0; Sm ith v . S mi th , 9 84 S.W. 2d60 6, 60 9 ( Te nn . Ct . A pp . 1 99 7) . A pp e llate c ou rt s ordinarily defe r to the trial court’s decision unless it is i nconsistent with the fac tors in Tenn. Code Ann. §36-4-121( c) or

is not supported by a preponde ranc e of the e vidence

. J oll y , 130 S.W .3d at 785- 86.-9-

Th e div isi on or dis tr ibu tio n of mari ta l pr op e rty inc lud e s the div isi on of mari tal deb t. Robertson , 76 S.W .3d at 341. L ike marital prope rty , marital debt is subject to equitable distribution. Al for d v . A lfo rd , 120 S.W .3d 810, 813 (Tenn. 2003). I n making an equitable distribution of ex isting

mari ta l de bt, the tr ia l c ou rt sh ou ld c on sid e r the fo llo wi ng fa c tor s: (1 ) wh ic h party inc ur re d th e de bt, (2 ) the pu rp os e of

the de bt, (3 ) w hic h part y be ne fi tte d fr om inc ur ri ng the de bt, a nd (4 ) w hic h p art y is better able to repa y

the debt. Al

for d
, 12 0 S.W. 3da t 81 4; Mo nd e lli v . H owa rd , 780 S.W .2d 769, 773 (Tenn. Ct. App. 1989). Application of these factors is desig ned to insure a f air a llocation and protec tion of one spouse fr om the persona l excesses of the other

. Al for d , 120 S.W .3d at 814.

Where ther e is rea lly

no dispute that the debt wa s incurre d by both pa rties for the benef

it of the famil y

or to a c qu ir e a

mari ta l a sse t, a ll the lis te d f a c tor s a re no t ne c e ssa

ri ly re le va nt a s th e re is

no iss ue of

pr ote c tio n f

ro m a sp ou se ’s e xce sse s. Cou rt s o ft e n a llo c a te a de bt that is a sso c ia te d w ith a spec ific asset to the party who is a war ded that asset. Kin ar d , 9 86 S.W. 2da t 23 3; Mo nd e lli , 780 S.W .2d at 773.

V. V A LU A TIO N O F M A R I TAL P R OPERTY

Af te r cl a ssi fying pr op e rt y

a s ma ri ta l or se pa rate , th e c ou rt ’s ne xt ta sk is t o v a lue the a sse ts so that an equitable distribution ca n be ac complished. The va luation of a marital asset is a question

o f f a c t to b e d e te r mi n e d b y c o n s id e r in g a ll th e r e le v a n t e vidence

. Kin ar d , 986 S.W .2d at 231; W allace v. W

allace , 733 S.W .2d 102, 107 (Tenn. Ct. App. 1987). I f the evidence the parties present as to v a lu e is c o n f

li c ti n g , th e tria l ju d g e may a s s ig n a v a lu e th a t is w ith in th e r a n g e of va lues supported by the evidenc e. Po we ll v . P owe ll , 1 24 S.W. 3d10 0, 10 5- 06 (T e nn . Ct . A pp . 2 00 3) ; Ray v. Ray , 916 S.W .2d 469, 470 (Tenn. Ct. App.1995). On appeal, we presume the trial judg e' s fac tual de te rm ina tio n s a s t o v a l u e ar e c o rr e c tu n l e s s t h e e v i d e n c e p r e p o n d e r a t e s a g a i n s tt h e m

. T e n n

. R. Ap p. P. 1 3( d) ; Jahn v. J

ahn , 932 S.W .2d 939, 941 (Tenn. Ct. App.1996).

Where two e x perts testify on the question of valuation of an asse t, the t ri al court is not require d to a cce pt the testimony of either e x pert. Ai rli ne Con str ., In c . v . B ar r , 807 S.W .2d 247, 264 (T e nn . Ct . A pp . 1 99 0) ; Coppage v. Coppage
, No. E2000-01630-COA- R3-CV, 2001 WL 394837, at *3 (Te nn. Ct. App. April 19, 2001). I n that situation, “[i ]n t he fina l analy sis, the cre dibilit y of the exp er t s an d t h e we ight to be g iven their testimony wer e questions for the trier of fac t.” Id . The

va luatio n me tho d u se d b y the e xpe rt is a n imp orta nt fa c tor in the de g re e of re lia nc e a

c ou rt sh ou ld pla c e on it.

Determining the va lue of a closely held corporation i s not an exact scienc e. W right v. Quillen
, 90 9 S. W.2 d 8 04 , 8 09 (T e nn . Ct . A pp . 1 99 5) ; W allace , 7 33 S .W. 2da t 10 7. I t c a n b e a dif fi c ult exercise f or any court. A numbe r of a cce ptable methods ex ist, and the court should chose an
acc eptable me thod t hat best fits the cha rac teristics of the business at issue. I n Blasingame v. American M

aterials, Inc., 654 S.W .2d 659 (Tenn. 1983)
, our Supreme Court discussed the va luation of closely held cor porations in the context of establishi ng the rights of m inority share holders. The Court noted that there wer e thre e widely -re cog nized methods: t he fa ir marke t approa ch, the va lue of asse ts approac h, and the c apitalization of income approa ch. The Court ado p t ed the so-ca lled-10-

“De lawar e Rule,” unde r which a dissenter’s sha

re s arevalued using all three methods, “assig ning such we ight to eac h method as may be appr opriate c onsidering the type of business, the obje ctives of the c orporation, and other re levant fa ctors.” 654 S.W.2d at 666.

I n W all a ce v. W

a l l a ce , su pr a , t h i s co u rt ex am i n ed t h e a p p ro p ri at e m et h o d fo r v al u i n g a clos ely -held c orporation for the purpose of distributing marital assets. Noting that in Blasingame the Supreme Court ha d rec og nized three a cce ptable methods, we held there wer e other methods and that “[t] he choic e of the proper method or combination of methods de pends u p o n the unique circ umstances of

eac h corpor ati o n.” 733 S.W.2d at 107. W hile rec og nizi ng that a consistent approa ch to the valuation of this type of marital asse t had not been e stablished, we a pproved Rev. Rul . 5 9- 60 , 1 95 9- 1 C. B . 2 37 a s p ro vid ing t he most c omp re he ns ive g uid e to m akin g thi s determination. W

allace , 733 S.W .2d at 107. This c ourt nonetheless cautioned that that ruling w as to be a g uide, not an inflexible rule. Id. The methodolog y specific ally

approve d includes

c on sid e ratio n o f n ine fa c tor s:
(1) the nature of the business, including its history since org anization, (2) the e conomic status of the industry

and the nation at the critica l date of va luation, (3) book va lue, (4 ) e arn ing s, (5 ) d ivi de nd s a nddiv ide ndpa y ing c apa c ity (6) the e x istence or

lack of g ood will or other intang ible value, (7) sa les of the stock a nd the size of the block to be va lued, (8) the selling pric e of c ompara ble sec urities rela tive to their ea rning s, dividends and

a sse t va lue s, (9) the life insuran ce p ro ce eds receive d by a cor porate benef

iciary on a policy

covering the sole or contr olling stockholder

.

W allace , 733 S.W .2d at 108.

As the courts have continued t o emphasize, the valuation method chosen should be the one

mo s t ap p li c ab le to th e s p e c if ic b u s in e s s a t is s u e in v ie w o f a ll th e c ir c u ms tan c e s. I n Ha z a rd v. Ha za rd , 8 33 S.W. 2d91 1, 91 4 ( Te nn . Ct . A pp . 1 99 1) , w e we re fa c e d w ith the qu est io n of h ow to value the me dical pra ctice of a divorcing husband. At trial, the hus band’s ex pert valued the pra ctice at $42,818. His valuation wa s based upon the va lue of the a ccounts re ceiva b le, ca sh on hand, equipment, fixt ures, of

fice equipment and supplies and the active and inactive medic al cha rts.

The wife ’s expert CPA concluded that the pr actice was worth $629,000. He testified that he

us e d a ll thr e e me tho ds fo r va lui ng the pr a c tic e , but his re su lt ap pe are d to ha ve be e n b a se d e nti re ly

on the re ve nu e it g e ne rate d. Th is c ou rt c ri tic ize d h is m e tho d, no tin g that ba sin g va luatio n e nti re ly

on pa st i nc ome c arrie s a n u ns po ke n impli c a tio n th a t th e inc ome wi ll r e ma in the sa me . We ult imate ly

a do pte d th e hu sb a nd ’s fi g ur e of $4 2, 81 8, re a so nin g that,-11-

[t ]o us e th e g r o s s in c o me ap p r o a c h to d e te r mi n e th e v a lu e o f h is me d ic a l p r a c ti ce would in effe ct be plac ing a value on the f

uture pe rformance of the pra ctice. Such f u tu r e p e r f o r ma n c e is d e p e n d e n t on man y f a c to r s w h ic h may

o r may n o t m a te r ia li ze and a va luation based on pre sent income is hig hly specula tive.

833 S.W .2d at 915.

VI

. A N A L Y SIS

I n the final analy sis, the equity or fairne ss of a particular distribution of marital prope rty and marital debt de pends upon its results in view of th e o v erall situation. King , 986 S.W .2d at 219; Th o m p s o n v

. Thompson
, 7 97 S.W .2d 599, 604 (Tenn. Ct. App. 1998). Ms. Ede nfield’s primary complaint i s t h at t h e t ri al court’s awa rd of the one -half inter est in First Choice, whic h is without value due to Mr. E d enfield’s ref usal to continue to work f or F irst Choice and Mr. L ewis’s re fusal to continue with her as co-ow ner, along with the $50,000 debt i ncurr ed to obtain that interest wa s inequitable.

She arg ues that the trial court should have g rante d her motion to alter or amend the judg ment or at lea st give n her a n opportunity to prove that Mr. Edenfield had taken actions t o destroy the value of F ir st C ho ic e by

sta rt ing a c omp e tin g c omp a ny

wi th Sco tt L e wi s anddis pa ra g ing he r t o c us tom e rs

. She relies on Loyd v. Loyd , 8 60 S.W. 2d40 9 ( Te nn

. Ct. Ap p. 19 93 ), a c a se wi th r e mark able sim ila ri tie s to the c a se be fo re us

.

I n Loyd
, the parties wer e the owne rs and ope rators of a business ca lled L oy d’s Tele phone. The wife did office work, a nd the husband sold and installed tele phone sy stems. The wife f iled for divorce . At trial, the wife’ s expert valued the company at $287,900 and the husba nd’s expert valued it at $52,700. The court then sent a letter to the parties’ attorney s, which dec lare d it was adopting the wife ’s valuation, and a war ding the business to her.

T h e w i fe s u b s eq u en t l y

fi l ed a “ m o t i o n t o re co n s i d er , ” a s s er t i n g t h at s i n ce t h e c o u rt ’s ru l i n g, hu sb a ndha d fou nd e d a new c omp a ny a ndha d “ sy ste ma tic a lly

dr a ine d a ll v a lue fr om the bu sin e ss” by using c ustomer lists and other information from L oy d’s, in essenc e tra nsfer ring its business to a

new c ompany . Since the fina l decr ee ha d not y et bee n enter ed, the tria l court c onducted a nother hearing, at which the wife ’s expert returned to testify that beca use of the hus band’s a ctivities, L oy d’s Telephone now had a

neg ative value

. Desp it e th is te s ti mo n y , th e tria l c o u r t’ s f in a l d e c r e e c o n tain e d th e s a me f in d in g as to the valuation of L oy d’s Tele phone and the same disposition of the property as di d its letter ruling. On appea l, this court hel d t h at the evide nce in the c ase supported the trial c ourt’s conc lusion that the business had a va lue of $287,884 in the ha nds of the husband. We found, howeve r, that the c ompany had a muc h lo we r v a lue in the ha nd s o f the wi fe , b e c a us e sh e didno t ha ve the te c hn ic a l e xpe rt ise to o p e r a te it

a n d b e c ause th e h u s b a n d w a s o p e r a ti n g a b u s in e s s in d ir e c t c o mp e ti ti o n w ith it

. We-12-

the re fo re re ve rs e d th e tr ia l c ou rt , c on c lud ing that “ a n e qu ita ble dis tr ibu tio n o f the e state ne c e ssa ri ly involves an aw ard of

the business to the husband.” Loyd , 860 S.W .2d at 412.

I t is we ll se ttl e d tha t a

fo rm e r s po us e ’s a c tio ns that r e du c e or de str oy the va lue of

pr op e rt y
awa rded to the other spouse in a divorce can r esult in alteration of the property division, Loyd , 860 S.W .2d at 412, or in the awa rd of damag es to the spouse who is deprived of the pr operty or its value. El lio tt v . E lli ott , 14 9 S.W. 3d77 , 8 6 ( Te nn . Ct . A pp . 2 00 4) ( h old ing that th e hu sb a ndimp e rm iss ibl y impeded the division of marital prope rty and that wife was e ntitled to recove r dama g es as a result). Ms. Edenfield’ s aff

idavit inclu d ed enough fa cts to justifya hea ring to determine w hether such a situation ex isted and whe ther it justified relief

. On appe al, Mr. Edenfie ld arg ues that Ms. Edenf ield was not entitled to relief from the jud g me nt b e c a us e , b a se d on the t e sti mon y a t tria l sh e sh ou ld h a ve a nti c ipate d th a t Mr . E de nf ie ld would re- enter

the field of sa les to car

deale rships and that he a nd Mr. L ewis would start a new business selling the sa me produc ts as Fi rs t Choice. We dec line to attribute that deg ree of fore knowledg e to Ms. Edenfie ld based upon the recor d. Nonethele ss, as di scussed below, we think the e vid e nc e a t tria l in dic a te d th a t th e c omp a ny ’s wo rth a ndvia bil ity we re de pe nd e nt u po n th e e ff orts of Mr. L ewis and Mr . Edenfie ld.

Not only did Ms. Edenfield file a motion to alter or amend af t er t he fina l judgment wa s enter ed, she a lso asked the co u rt to rec onsider its orig inal proposal to awa rd F irst Choice to her

s h o rt l y afte r the memora ndum opinion containing that pr oposed distribution was enter ed. She

a lle g e d M r. Ed e nf

ie ld h a d le ft

e mpl oyme nt w ith F ir st C ho ic e a ndthat Mr . L e wi s had refu sed to continue the business with her as a pa rtner. Ms. Ede nfield also alleg ed Mr. Ede nfield had not transfe rre d the stock ce rtificate s to her and that First Choice ha d been a dminist ratively dissolved prior to the divorc e hea

ring . Ms. Edenfield wa s not g iven a hearing to prove these alleg ations, even though Mr . Edenfie ld ag ree d to the basic fa cts she alleg ed.

I n the hea ring on that motion, the trial c ourt commented that it looked like the business had no value a nd that “in re trospect,” Mr. Edenfie ld’s acc ountant may have been corr ect in his valuation opinion. W hile the court sugg ested the pa rties attempt to resolve the issue prior to e ntry of a f inal judgmen t , i t en ded up aw arding the intere st in the business to Ms. Edenfield, along with the debt

a sso c ia te d w ith its a c qu isi tio n, a nd to use the va lue orig ina lly a ssi g ne d to it to de ny oth e r r e lie f t o Ms. Edenfield. Since the court had not y et enter ed a final order
, it ha d the authority and discre tion to rec onsider and modify

its preliminary

ruling and/or to order t hat additi onal testimony be take n as to the value of First Choice. See Te nn

. R. Civ

. P. 54 .0 2. I t didne ith e r, e ve n th ou g h it s c omm e nts indicate it no long er w as convinc ed of the value a ssigne d.

The de velopments afte r the c ourt’s propose d dispositi on but before the entry of th ef in a l o r der

c e rt a inl y c a lle d in to q ue sti on the e qu ity of the ov e ra ll d ist

ri bu tio n o f a sse ts a ndde bts . T he y a lso point out the problem with the court’s initial valuation of the one -half sha re i n t h e b u siness. The other c o-owne r dec lined to continu e in business with Ms. Edenfield a s co-owne r or pa rtner, indicated he wo ulddis so lve the c or

po ratio n, a ndde c lin e d to c on tin ue to wo rk fo r F ir st C ho ic e . T he po ssi bil ityIn fac t, M r. E d e n field tes tif ie d tha t se v e ra l m a

jo r d e a le rs h ip s h a d d isc o n tinu e d b u ying fro m his c o m p a n y in 3

t he m o nt hs l ead i ng up t o the heari ng. H i s t est i m o ny a d d res sed som e o f the f act o rs set o ut i n W al l ace

. W hen asked i f t he (c o n tinu e d ...)

-13- that he would take these a ctions w as fore seea ble since the rea son for the buy /sell ag ree ments had been to protect e ach c o-owne r of F irst Choice from ha ving to unwilling ly work with the other ’s sp ou se

. We not e that Ms. Ede nf ie ld’ s expe rt wa s not as ke d how the va lue of the c omp a ny wo uld be affect ed by dis so lut ion of the c or po ratio n o r t

he re fu sa l to the oth e r c o- ow ne r t o c on tin ue in business with Ms. Edenfield.

Thus, althoug h we think the trial c ourt should have g iven Ms. Edenfi el d a h earing on her motion to alter or amend a nd modify the distribution of assets and debts if the evide nce show ed, as her a ffidavit cla imed, that Mr. Edenfie ld ha d destroy ed any value in the company ; and althoug h we also think the court should have chang ed its initi al proposed a war d if, as a r esult of the hea ring befor e the f

inal order was e ntere d, it became convince d the bus iness was valueless; we are c onvinced that th e ba sic pr ob le m orig inate d w ith the c ou rt ’s va luatio n of the on e -h a lf int e re st i n th e bu sin e ss in the hands of Ms. Ede nfield.

I n view of t h e trial testimony reg arding the nature of the business, we conclude that the

e vid e nc e pr e po nd e rate d a g a ins t th e tr ia l c ou rt ’s va luatio n o f the on e -h a lf int e re st in Fi rs t Ch oic e if that in te re st were tr a ns fe rr e d to Ms. Ed e nf ie ld. “ Va luatio n d e c isi on s w ill be se t a sid e on app e a l, even if within the rang e of proof, if they are contra ry to a preponderance of

the evidenc e.” Loyd , 860 S.W .2d at 411. L ike the court in Loyd , we are c on vin c e d tha t wha te ve r the va lue of F ir st C ho ic e in the hands of the orig inal co-ow ners, that value was depende nt upon the ef forts of a nd relationships established by

them. Mr. Edenf

ield’s testimony made that clea r. He insisted that the business wa s himself and his partne r. He depende d on his personal re lationships with car deale rs to maintain the business’s customer ba se. Mr. Ede nfield’s testimony at trial is instructive in this reg ard:

. . . Our c ompany

is us. No differ ent than any body else in the service business. . . . I offe red to g ive Kar a this business. I will still do it today . She can ha ve it. But she couldn’t do it. You couldn’t do i t, You couldn’t pay a dollar f or it. Nobody

would, be c a us e the y

c a n’ t do it. I

a m my bu sin e ss.
Q. Okay . So it’s basically a job?

A. Ye s.

Th e e vid e nc e sh ow s th a t th e bu sin e ss i tse lf ha d n o a sse ts a ndwa s si mp ly a me c ha nis m throug h which its co-owne rs ea rned a living. Mr. Ede nfield’s description is important to the choice of the mos t app ro pr ia te va luatio n me tho do log y , a nd the me tho d u se d b y Ms. Ed e nf

ie ld’ s e xpe rt

is questionable in light of the a ctual fa cts of the c ompany . L ike the medica l prac tice in Ha za rd , F ir st Choice re lied on the per sonal eff orts of its principals. B ecau s e o f t h e n ature of its business, the f u t u r e i n c o m e o f

F i r s tC h o i c e w a s s u b

j e c tt o e v e n m o r e u n c e r t a i n t y. 3(

. . . con t i n u ed) 3

com pany ha d a posi t i ve bal anc e, he r epl i ed, “ A t t hi s poi nt i n t i me, t her e i s no posi t i ve bal anc e of t he com pany

. ”

-14- Whil e Ms. Edenf

ield’s expert wi t n es s showed some a war eness of the three methods discussed in Blasingame , he re lied on only one to re ach his c onclusion. Asked why he sele cted the

c apit a lizatio n o f i nc ome me tho d, Mr . H ule n te sti fi e d, ” [w]e ll, the oth e r m e tho ds inv olv e a ss ets, wh ic h thi s c or

po ratio n d oe sn ’t

ha ve a nd , s ome of

the oth e r, I

c a n’ t r e me mbe r e xac tly

wh y , b ut this

one fit.” We disa g ree

. As set out e arlier
, our courts have consistently stated that t h e v al u at ion method must give a

ppropriate weig ht to the fac ts of the business itself. Se e W hit e v . W hit e , 1 9 9 1 WL 11 65 37 , at *3 (T e nn . Ct . A pp . J uly 2, 19 91 ) ( ho ldi ng that w he re va luatio n g a ve g re a t w e ig ht t o
un re lia ble mark e t pric e e sti ma te , th e va luatio n c ou ld n ot b e c on sid e re d) . Wh ile a c ou rt ma y c ho os e a valuation within t he rang e of evidenc e, that rang e must be established by cre dible evidenc e, and the value c hosen must be a r easona ble one.

As Ms. Ed e nf

ie ld p oin ts o ut, se ve ra l c a se s f ro m othe r jurisd ic tio ns ha ve he ld that it is u su a lly inappropriate to awa

rd one spouse ’s partial interest in a closely -held business to the other spouse, beca use it would be unfa ir to the other share holders in the business, and would likely lead to friction with them. Grace v. Grac e, 38 0 N .W. 2d28 0, 28 5 ( Ne b. 19 86 ); Glo r f i eld v. Glorfi eld, 617 P.2d 1051, 105 4 ( Wa s h

. A p p

. 1 9 8 0 )

. T e n n e s s e e c o u r ts h a v e s im il ar ly r e c o g n iz e d th e a d v is ab il ity of

a wa rd ing a n o ng oin g bu sin e ss t o th e sp ou se wh o h a s th e e xpe rt ise re qu ir e d to c on tin ue op e ratin g it. See
, e.g. , Sickler v . Sickler , No. 01-A-01-9710-CV-0057, 1999 WL 270186, at *6 (Te nn. Ct. App. Ma y 5, 19 99 ) ( ho ldi ng tha

t c ou rt had no in ter e st i n f

or c ing the pa

rt ie s to ma int a in a

bu sin e ss relationship and that an equitable distribution require d that the intere st in the business be awa rded to the party

with the expertise and experienc e to conduc t it.)

One pur pose of property division in divorce is to sepa rate the financ ial aff

airs of the parties

so the y c a n b oth pu rs ue the ir ow n liv e s, fr e e , ins of ar a s p os sib le , f

ro m un wa nte d e ntang le me nts wi th

eac h other’s a ffa irs. Anderton v. Ande rton , 988 S.W .2d 675, 679 (Tenn. Ct. App. 1998). Awarding Ms. Ed e nf

ie ld o ne -h a lf int e re st in the c omp a ny that e mpl oy e d M r. Ed e nf ie ld w a s n ot c on sis te nt w ith that g oa l, andhe c e a se d b e ing a n e mpl oy ee. Simi larl y , it wa s c le ar f

ro m th e sto c k p ur c ha se ag ree ment betwee n Mr. L ewis and Mr . Edenfie ld that Mr. L ewis had absolutely no interest in having Ms. Edenfield a s a business partner a nd had take n steps to preve nt that occur renc e in the ev ent of Mr . E de nf

ie ld’ s d e a th. Ag a in, e xpe c tin g a no the r p art y to c on tin ue in a

bu sin e ss r e la tio ns hip he did not want was unr ealistic.

We conclude that First Choice ha d littl e or no va lue in and of itself and certainly had no value in the ha nd s o f M s. Ed e nf ie ld. I ts a wa

rdto e ith e r s po us e wo uldmake no dif fe re nc e to the jus tne ss of the prope rty distribution. Be cause of the time that ha s passed since the parties we re divorc ed, the chang es in the ir situations, and the fac t that F irst Choice is now essentially nonexis tent, we se e no point in chang ing the awa rd of one -half interest in Fir st Choice to Ms. Edenfield, espe cially since we ha ve conc luded its value of zero w as attributable in lar g e part to the c ourt’s awa rd of it to her.A m o ng t hese f act o rs , t he t wo co nsi d ered t o be t he m o st i m p o rt ant are t he d i sadvantaged sp o use’ s need and 4

the o b ligo r sp o u se ’s ab ili ty t o p a y. Rober t s on v

. Rober t s on , 76 S.W

. 3 d 33 7
, 34 2 (T enn. 20 0 2 ).

-15- Howeve r, v al u ing the interest at zero doe s aff ect the justness of the allocation of the debt incurre d to purcha se the one -half inter est in the business. Whil e debts ofte n foll ow the asse t associate d with them, King , 986 S.W .2d at 219, that principle has no re al application when the asse t has no value. The question is whether the court’s allocation of the $50,000 debt associated wit h the

a c qu isi tio n o f the int e re st i n F ir st C ho ic e sh ou ld b e modifi ed. We c on c lud e that it is c le arl y ine qu ita ble to imp os e the e nti re de bt on Ms. Ed e nf ie ld in vie w of the ov e ra ll d ist ri bu tio n o f a sse ts

a ndde bts . H ow e ve r, we are no t c on vin c e d that it wo uld be e qu ita ble to a ssi g n the e nti re a mou nt t o Mr. Edenf

ield either.

We are convince d that Mr. Edenf ield acc urate ly

described Fir st Choice as primarily a sourc e of e mpl oyme nt. Th e $5 0, 00 0 in ve stm e nt a llo we d him to earn a sa lary , a ndbo th p art ie s e njo y e d to benef its of that income during the marriag e. It provided the ba sis for the amount of support he was order ed to pay

upon divorce . Had he continued to wo rk fo r First C hoice, that sa lary would have provided the sour ce f

or the support pa y ments he wa s order ed to make.

We hold that an equitable dist ri bution of property and allocation of debts require s that the $5 0, 00 0 d e bt i nc ur

re d fo r the pu rc ha se of

the on e -h a lf

int e re st i n F ir st C ho ic e be a llo c a te d e qu a lly be tw e e n the pa

rt ie s. Con se qu e ntl y , M s. Ed e nf ie ld i s e nti tle d to a

jud g me nt f

or that a mou nt a g a ins t Mr. Edenf

ield. On rema nd, the trial court sha ll fix the exact amount and the a ppropriate method of pa y me nt.

Be cause of our r esolution of the issues surrounding First Choice, w e dec line t o m ake a ny oth e r a dju stm e nts in the tr ia l c ou rt ’s a wa rdof pr op e rt y a ndde bt.

VII. A T T ORNE Y F EES

An a wa rdof a tto rn e y ’s fe e s in div or c e c a se s is c on sid e re d a limon y or spou sa l su pp ort, g e n e r a l l y c h ar a c t e r i z e d a s a l i m o n y in solido

. Y ount v . Y ount , 91 S.W .3d 777, 783 (Tenn. Ct. App. 2002); W ilder v. W

ilder , 66 S.W .3d 892, 894 (Tenn. Ct. App. 2001); He rre ra v . H e rre ra , 944 S.W. 2d37 9, 39 0 ( Te nn . Ct . A pp . 1 99 6) ; Houghland v. Houghland
, 84 4 S.W. 2d61 9, 62 3 ( Te nn . Ct

. App. 1992).

B e c a us e a tto rn e y ’s fe e s are c on sid e re d a lim on y or sp ou sa l su pp ort, a n a wa rd of su c h fe e s is subject to the same fac tors that must be considere d in the awa rd of a ny other ty pe of a limony

. Y

ount , 91 S.W. 3d a t 78 3; Lindsey v. Lindsey
, 976 S.W .2d 175, 181 (Tenn. Ct. App. 1997) . There fore , the statutory fac tors listed in Tenn. Code Ann. § 36-5- 101(d)( 1) ar e to be consider ed in a de termination of whe ther to aw ard attorney ’s fe es. Lan gs c hm idt v . La ng sc hm idt

, 81 S.W .3d 741, 75 1 (Tenn. 2002); Kin c aid
, 91 2 S.W. 2d 14 0, 14 4 ( Te nn . Ct . A pp . 1 99 5) ; Houghland
, 844 S.W .2d at 623. One 4-16-

of those fa ct o rs is“[t] he provisions made w ith reg ard to the ma rital property

as def ined in § 36-4- 121.” Te nn. Code Ann. § 36-5- 101(d)( 1).

Th e tr ia l c ou rt

he re in e xpre ssl y

re lie d o n th a t f

a c tor , d e c lin ing to a wa

rda tto rn e y

fe e s to M s. Ed e nf ie ld be c a us e sh e re c e ive d pro pe rt y “ va lue d in exce ss of $3 40 ,0 00 .” Th is r e a so nin g is n ot o nly consistent with the sta t u t o ry fa ctor, but i s also in acc ord with judicial holdings. Rec ently , the Supreme Court re aff

irmed that an awa

rd of attorney ’s fe es “is conditioned upon a lack of resour ces to prosecute or def

end a s u it in good fa ith . . .” and that such a n awa rd is to ensure a cce ss to the

c o u r ts

. Langschmidt
, 8 1 S

. W

. 3 d at 7 5 1
, q u o t i n g Fox v . Fox , 657 S.W .2d 747, 749 (Tenn. 1983)

. Consequently , a spouse with adequate prope rty and income is not entitled to an a war d of additional alimony to compensate for attor n ey ’s fe es and expenses. Lindsey , 976 S.W .2d at 181; Duncan v

. Duncan , 686 S.W .2d 568, 573 (Tenn. Ct. App. 1984). I f a party has adequate property and income, or is awa rded a dequate property

in the divorce , from which to pay his or her ow n expenses, an aw ard

o f a tt o r n e y ’ s f

e e s may n o t b e ap p r o p r iate a f te r c o n s id e r a ti o n o f a ll r e le v a n t f a c to r s. W

i lder , 66 S.W .3d at 895; Koj a v . Ko ja , 4 2 S. W.3 d 9 4, 98 (T e nn . Ct . A pp . 2 00 0) ; Houghland , 844 S.W .2d at 62 3- 24 ; Ingram v. I

ngram , 721 S.W .2d 262, 264 (Tenn. Ct. App. 1986). T he aw ard of attorney ’s fe es
a s a dd iti on a l a lim on y is mos t app ro pr ia te wh e re the div or c e do e s no t pr ov ide the ob lig e e sp ou se wi th

a so ur c e of

fu nd s, su c h a s f

ro m pr op ert y di vi si on , w ith wh ic h to pa y his or he r atto rn e y ’s fe e s. Y ount , 91 S.W .3d at 783.

The trial court’s rea soning was sound, but we ha ve sig nificantly modified the valuation upon which the de cision was base d and, conse quently , remove d its factual pr edicate. B eca use a tria l court has wide discr etion in a dec ision to award attorney ’s fe es, t his court will not interfe re w ith such an

awa rd, “e x cept upon a

showing of abuse of discre tion, where the evidenc e pre ponderates ag ainst the

awa rd, and a manifest injustice will be done if the T ri al C o u rt s ’s decision is allowed to stand.” W ilder , 6 6 S. W.3 d a t 89 4; Long v. Long, 95 7 S. W.2 d 8 25 , 8 29 (T e nn . Ct . A pp . 1 99 7) ; Kin c aid , 912 S.W .2d at 144.

Be cause we ha ve re moved the fa ctual basis for the court’s decision, the trial c ourt should be g iven the opportunity

to rec onsider the que stion of attorney ’s fee s on the basis of the modifications

we ha ve ma de . We are no t ne c e ssa ri ly sa y ing that Ms. Ed e nf ie ld mus t be a wa

rd e d h e r atto rn e y

fe e s, b u t o n ly th a t th e c o u r t s h o u ldb e g iv e n th e o p p o rtu n ity to take a secon d lo o k a t th e q u e s ti o n

. We there fore rema nd this case to the t rial court to consider w hether Ms. Edenfield should be a war ded all or some portion of the attorney fee s she incurr ed in the cour se of this divorce

.
VI II. C ONCL US I ON

The trial c ourt’s aw ard to Ms. Edenf ield of the intere st in First Choice is aff ir med, but the

va luatio n is mod if

ie d to zer o. Con se qu e ntl y , o ne ha lf of the de bt inc ur

re d to ac qu ir e that in te re st i s allocate d to Mr. Edenfie ld, to be paid as dire cted by th e t ri al co u rt on rema nd. The trial c ourt’s de c isi on no t to grant Ms. E de nf ie ld any pa rt of he r atto rn e y

fe e s is va c a te d, a ndthe tr ia l c ou rt is direc ted to rec onsider this issue in light of our modifications. I n all other re spects, the f inal order of the trial c ourt is affirmed. Thi s cause is rema nded to the C hance ry Court of Knox County for a ny-17-

further proce eding s n ec es s ar y co nsistent with thi s opinion. The costs on appea l are to be divided equally and ea ch party

taxed with one half.

____________________________________ PATRI CI A J . COTTRELL , J UDGE